New Delhi : To help deepen commodities market, the Securities and Exchange Board (Sebi) is planning to allow mutual funds and portfolio management service providers in commodity derivatives within the next six months.
Such a move will help deepen the market and provide hedging opportunities to large companies. The regulator also plans to let even foreign institutional investors after a regulatory framework is put in place. “We had several rounds of discussions with various stake-holders in the commodity value chain. Sebi is in the final stage of announcing the regulation for this segment of market participants over the next six months,” Sebi executive director SK Mohanty said here Tuesday.
Addressing an industry event organised by industry lobby Ficci, he said, “We want large institutional investors that are currently trading in global exchanges to participate in our commodity platforms”. Earlier, Sebi had allowed options trading in commodity derivatives to expand the market and enhance liquidity. The regulator also opened up the market for hedge funds registered as Category III alternative investment funds. Meanwhile, Thomson Reuters launched an India-specific indices in association with leading commodity exchange, Multi Commodity Exchange of India.
MCX Managing Director Mrugank Paranjape said mutual funds and PMS would bring in sticky money to commodity derivatives and encourage traction in long term contracts. The exchange is looking at dates between October 5 and 23 to launch gold options, he said. Sebi, which started regulating commodity markets after the merger of FMC, is working towards developing commodities markets. by bringing in more participants like FPIs, insurers.
The Securities and Exchange Board of India is considering allowing gold exchange-traded funds to trade in gold futures and options, said S.K. Mohanty, executive director of the regulator. “Our investment management department has given the proposal and it is likely to be approved in due course,” Mohanty said, adding that it would help fund managers take positions in the underlying asset on commodity exchanges. Gold exchange-traded funds are required to buy physical gold equivalent.
